It’s a highly disturbing, and completely shocking report. ProPublica’sJessie Eisinger and Chris Arnold of NPR claim that the government-owned mortgage company was investing in securities that paid substantially more if people continued to pay off high-interest mortgages.

At the same time, they were tightening the grip on credit, making it difficult for homeowners to refinance and get out of such mortgages.

So what was good for Freddie Mac’s bottom line was diametrically opposed to what was right for some people who had mortgages with them.

Now Freddie Mac officials claim there was a Chinese wall set up between the staffers responsible for their investments and those who dealt with credit regulations.

They deny there was any intent to manipulate credit regulations to enhance their pockets, and the investigation offered no evidence that there was.

Yet they’ve already agreed to stop making these risky investments, known as inverse floaters, after the Federal Housing Finance Agency leaned on them once the investigation became public.

Even if you buy Freddie Mac’s explanation, it doesn’t soften the blow. The conflict of interest here is unequivocal. The company is now essentially, owned by the taxpayers, and has a direct impact on who and who can not get a home loan.Continue reading→

The federal agent whose team of “Untouchables” couldn’t be bought off and helped bring down Al Capone?

Schneiderman too has the era of a man who will not be co-opted. If anyone can stay above the fray and not be reeled in by the banks and their money, he can.

Investigation Going After Cause of Housing Crisis

Schneiderman has stood up to the President before, openly opposing the settlement agreement that we here at the South Florida Law Blog have railed against. And now he is Obama’s point man for placing blame and creating accountability for causing the worst economic crisis in the US since the Depression.

Elliot Ness

The Huffington Post is reporting that outside of claims directly relating to robo-signing fiasco, the banks will not be released from the threat of prosecution for the vast majority of securities-related crimes.Continue reading→

Most of our attention has been on the President this week, but we’ve also been keeping our eyes of the Republicans as well. With the Florida GOP Primary just days away, the candidates have been descending on Florida as expected. Foreclosure, which has been long absent from the GOP discussion, has become a more focal issue this week.

Unfortunately, it feels like much of the talking points have focused on the candidates blaming each other for causing the housing crisis, and less on what they plan to do to fix it.

This excellent piece in The Street details all the remaining Republicans comments on foreclosure. They all have suggested a hands-off approach, and appear to be under the misguided notion that the market will correct itself on its own. Gingrich and Paul have made one-note villains out of the Dodd-Frank Actand The Federal Reserve, respectively.

Like the characters in "The Blair Witch Project", the banks are running scared!

Well what a wild week it has been. When we came to work on Monday we feared President Obama would put the housing crisis to bed without ever holding the banks’ feet to the fire.

The settlement with the banks, which we have blogged about ad nauseam this week, seemed as sure as a chip-shot field goal.

But thanks to President Obama’s suddenly get-tough approach, as evidenced by his State of the Union speech, we’ve seen the banks’ kick go wide-right and now all bets are off.

Can There Be Real Change In Mortgage Industry?

Now we are not completely sold that things will play out exactly as homeowners would like, this is of course the federal government we’re talking about, but for the first time we have a true sense of optimism. The President may finally be seeing things our way, and we want to throw our full support behind him.

There is no doubt cages have been rattled in the mortgage industry, and nerves have been frayed. If Obama’s plan to re-write the foreclosure rules didn’t have some kind of teeth, then we doubt we’d be seeing the type of reverberation thorough the media and the top echelons of government that we’ve detected in the last few days.